We all know we’re supposed to have some money set aside for emergencies.
Unfortunately, finding the money to put into an emergency fund can be difficult. In fact, last year the American Psychological Association pointed out that the number one stressor for people is money.
On top of that, there are reports that the rebounding economy is leaving some folks behind. Even though many stories and statistics proclaim recovery.
No wonder people feel like they can’t figure out how to save money on a tight budget.
However, if you feel totally broke but still want to start a savings habit, it’s not completely impossible.
Why start an emergency fund?
Your emergency fund can help you weather financial setbacks that can turn into real problems later.
Car repairs are typical expenses covered by an emergency fund. I remember one time doing the math for one of them. Did I have enough for a $300 car repair? Not really. So I had to ask myself a few tough questions.
Do I ignore the problem and try to save up? What if that sort of minor issue morphs into a major issue that costs even more by the time I can address it? On the other hand, I’ve just paid down my credit card, and there’s just enough room now to charge the repair.
An emergency fund helps alleviate some of this problem. If you need a $300 car repair, and you have $200 in your emergency fund, you can look for other ways to get that $100. Having an emergency fund makes that gap a little easier to manage.
Building your emergency fund over time makes sense as well. You may even be able to amass two or three weeks (or months) of expenses when you spend enough time saving. This can come in handy if your hours are cut at work or you’re unexpectedly unemployed.
How to save your money
Even if you’re broke, you can still start saving. It’s not always easy to figure out how to save your money, but it is possible. Here are five steps for how to save money when you’re broke:
1. Open an account for savings
The first step is to open an account designated for saving. Just opening an account can help you get in the right mindset for saving.
Look for a financial institution that doesn’t require an account minimum or charge various fees. Many small community banks or credit unions offer savings accounts free of fees.
And while there are lots of places to keep your emergency fund, consider starting with a plain vanilla savings account. No need to get fancy from the get-go.
2. Start small
Many of us may think we don’t have enough money available to set aside to make saving it worth it.
However, you can learn how to save your money even when you’re broke. Any amount is worth putting in an emergency fund. The habit is the important thing.
If you can only set aside one dollar each day, that’s fine. You can put a dollar in a jar each day, and at the end of two weeks or a month, deposit it in the bank. It may seem like a small thing, but the mindset you develop is powerful.
Another strategy is to use the 52-week challenge. During the first week of the year, you set aside a dollar. The next week, you set aside two dollars. You get the idea. By the end of the year, you should have $1,378 in your emergency fund.
The idea is to get in the habit of looking for more ways to save over time. And, keep up with the habit. As your financial situation improves, you can boost your savings as well.
3. Make it automatic
I actually don’t like remembering to transfer money into another account. Or, collecting it to bring to the bank later.
For me, it’s all about the automation. Out of sight, out of mind — and growing my emergency fund over time.
Make it automatic by talking to your employer and seeing if you can have a portion of your paycheck automatically deposited into your savings account. Or, if that’s not an option, set up an automatic transfer each month. Just make sure you coordinate it with your pay day and when your other bills are due.
Another way to make it automatic is to use a savings app like Dobot. These kinds of apps monitor your income and spending patterns. They can also withdraw a small amount of money at a time. Look for an app that guarantees it won’t overdraw your account.
Once you get used to not having the money available to you, you might be surprised at how well you can do without it.
4. Cut more of your spending
Take a look at your spending plan. Are there areas where you can cut back?
Reducing your power consumption can help you save a few bucks on your utilities. So can brown bagging it and taking your lunch to work. Or, cutting entertainment subscriptions like cable.
We all know the drill when it comes to cutting down spending. Just remember to start small with little moves like these.
5. Make more money
Of course, there’s only so much you can cut. Eventually, you’ll reach a point where you just can’t squeeze one more penny out of your budget.
This is when you determine whether or not you might be able to make a little extra money instead.
A good way to start making extra money is by taking a seasonal job or starting a side gig. If you are following a savings plan like the one from Dave Ramsey, you can get to the point of $1,000 in your emergency fund and then cut back on the extra work.
Not everyone has the time or ability to take on more work. But if it’s an option for you, it can be one way to kickstart your emergency fund when you don’t have any extra money to spare.
Do you need financial help?
If you are in a place where you don’t have a dollar a week to spare, you might need financial help.
Consider reaching out to your support system or family for financial aid. Although it may be difficult or uncomfortable at first, there’s no shame in asking for help when you need it the most.
There are also community resources that you might have access to. Accessing local food pantries can help you save money on food. That allows you to then turn around and put that money in your emergency fund instead.
Community programs also often offer financial counselors that can help you review your finances. Then, they can make suggestions for improving your situation.
Additionally, many cities have programs designed to help you pay your utilities. And many religious congregations offer financial aid to members.
Sometimes the help you need isn’t even financial.
I often help my sister by watching her kids so she can work without paying for daycare. My parents took me to the store to buy my first two weeks’ of food and some cleaning supplies after my divorce. They didn’t give me money, but it helped free up my own resources.
Every little bit helps
At the end of the day, your emergency fund is all about helping you manage unexpected (and often unpleasant) financial situations. That’s why it’s so important to access and build upon that mindset of saving.
By learning how to save your money (even when it seems like it’s impossible), you’re one step closer towards peace of mind and financial stability when times get tough.
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
|Check out the testimonials and our in-depth reviews!
1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 7.89% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.97% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.57% – 6.97%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.50% – 7.24%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|